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How Alliant Plans To Triple Down On NII

The Illinois credit union has a lower-than-average reliance on non-interest income and plans to increase those revenue streams in the coming years.

Relatively speaking, Alliant Credit Union ($9.1B, Chicago, IL) doesn’t generate a large amount of non-interest income. The Chicago credit union reported slightly more than $23 million in non-interest income in 2015, compared with $33.7 million for the average $1 billion-plus credit union.

In 2015, only 9.9% of Alliant’s income came from non-interest sources. By comparison, its asset-based peer average was 27.9%. In the past five years, that proportion for Alliant has been as low as 5.8% — in the first quarter of 2011 — and as high as 12.13% — in the third quarter of 2013.

NON-INTEREST INCOME/TOTAL INCOME
FOR U.S. CREDIT UNIONS >$1B IN ASSESTS | DATA AS OF 06.30.16

But the big Plains State credit union with a nationwide, even international, membership plans to use technology and sales savvy to grow that business in the years ahead, says its president and CEO, Dave Mooney.

“In the past, non-interest income has been a relatively small contributor to Alliant’s total income because we intentionally have few and low fees – to provide consistently superior financial value to members,” Mooney says.

Dave Mooney, CEO, Alliant Credit Union

“We see NII as an opportunity for additional revenue over time and are looking to increase non-interest income in a way that adds value to our membership,” he adds.

Expand usage across products such as checking, debit, and credit cards.

Insurance

Insurance Alliant generated $2.9 million in income from insurance in 2015. Nearly $400,000 of that came from accidental death and dismemberment, life, and property and casualty policies from CUNA Mutual Group and its TruStage arm.

"We’re on track to beat those numbers in 2016,” Mooney says.

CU QUICK FACTS

ALLIANT CREDIT UNIONData as of 06.30.16

HQ: Chicago, IL

ASSETS: $9.1B

MEMBERS: 321,615

BRANCHES: 12

12-MO SHARE GROWTH: 11.1%

12-MO LOAN GROWTH: 10.4%

ROA: 0.7%

Alliant has increased its insurance business approximately 10% in the past two years, largely as the result of growing membership itself.

"We’ve increased our auto and mortgage loans over the past few years,” Mooney says. “That's enabled our sales teams to make more referrals to TruStage for policy coverage.”

The credit union sells TruStage policies through direct marketing and — in the case of P&C ­— via leads from Alliant’s sales team to the TruStage team, Mooney says. He sees more growth coming as the credit union integrates TruStage data into the credit union’s CRM and marketing automation software.

"This should make it easier for our front-line personnel to understand these types of opportunities,” Mooney says. “It will also help them answer member questions and prevent the likelihood of members getting inundated with multiple marketing campaigns at one time.”

Investments

Alliant generated $2.6 million in investment fee income in 2015, all from the sale of stocks, bonds, and mutual funds. An investment services team of 15, including 10 financial consultants, oversees that line of business. Of the financial consultants, Mooney says, “They are incented with a small base salary and a monthly commission grid based on production level. Alliant has collaborated with LPL Financial for the past four years, and Mooney cites scale, product lineup, and technology as keys to success in that partnership.

Alliant has collaborated with LPL Financial for the past four years, and Mooney cites scale, product lineup, and technology as keys to success in that partnership.

Mooney also says Alliant isn’t concerned particularly about regulatory changes that could affect how credit unions generate fees from non-sufficient funds. Although the credit union generated $1.7 million in 2015 from such programs, they’re opt-in at Alliant and fees are less than those charged by other financial institutions.